Posts Tagged ‘Internet of Things’

Dr. Herbert Lin, one of the nation’s pre-eminent thinkers on cybersecurity policy, shuns the internet-connected devices that fill some American homes.

He’ll have nothing to do with “smart” refrigerators, hands-free home speakers he can call by name, intelligent thermostats and the like.

“People say to me, ‘How can you have a doctorate in physics from MIT and not trust in technology?’ And I look at them and say, ‘How can I have a doctorate in physics from MIT and trust technology?’ ” Lin said.

Part of what he distrusts is the “internet of things,” and the ease with which hackers can penetrate “smart” devices with digital worms and shanghai them into massive robotic networks to launch crippling digital attacks or generate ever greater quantities of spam.

It is a mistrust based on mathematics. Internet-enabled devices are exploding in number. Gartner, a research giant in technology, says the devices will climb from 6.4 billion at the end of last year to 25 billion by 2020. Such growth sharply augments the power of hidden robotic networks, or botnets.

Now, an unseen battle unfolds. Weaponized digital worms are entering the scene and infecting masses of devices that obediently await instructions from a remote master to spring to action, possibly a new botnet attack.

The threat from botnets is so serious that FBI Director James Comey brought them up at a Senate hearing last week, saying the “zombie armies” created from internet devices can do tremendous harm.

“Last month, the FBI – working with our partners, with the Spanish national police – took down a botnet called the Kelihos botnet and locked up the Russian hacker behind that botnet,” Comey said. “He’s now in jail in Spain, and the good people’s computers who had been lashed to that zombie army have now been freed from it.”

Further botnet attacks are inevitable.

THE NEXT ONE COULD BE JUST SECONDS OR MINUTES FROM HAPPENING AGAIN.

J. Kevin Reid, analyst at KeyLogic

“The next one could be just seconds or minutes from happening again,” said J. Kevin Reid, a former FBI agent who leads the national security portfolio at KeyLogic, a Morgantown, West Virginia, firm that offers consulting services to the federal intelligence community.

A botnet already made headlines once. Last Oct. 21, a botnet slowed internet activity to a crawl along the Atlantic Seaboard. A hacker using a malicious worm dubbed Mirai – Japanese for “the future” – took over thousands of internet-connected security cameras and other seemingly innocuous devices and ordered them to fire relentless digital “pings” at a New Hampshire company, Dyn, that oversees part of the backbone of the internet. Dyn was overwhelmed, and popular sites such as Twitter and The New York Times were temporarily inaccessible.

Our dependence on technology may be growing faster than our ability to provide security on the internet, says Joshua Corman, head of a cybersecurity initiative at the Atlantic Council, a Washington DC think tank.

Tim Johnson / McClatchy

Now a new worm, dubbed Hajime – Japanese for “beginning” – is spreading.

The Moscow-based Kaspersky Lab estimated in late April that the Hajime worm had already penetrated 300,000 devices worldwide and could rally them into a botnet army at a moment’s notice.

Initial forensics reports suggested that the Hajime worm might be the creation of a “white hat” hacker working to thwart future attacks by Mirai botnets. Hajime leaves behind a message that says in part: “Just a white hat, securing some systems.” But even if Hajime is presently a force for good, protecting devices from Mirai infection, how long will that last? Some analysts have doubts.

“While infected with Hajime, the vulnerable devices are protected from known Mirai attacks,” a principal security researcher for Kaspersky Lab, Igor Soumenkov, said in an email. He added, however, that “Hajime’s spreading methods are malicious in nature” and the worm “may go rogue at any time.”

“I don’t want something working on my system when I don’t know what it is,” Lin said, adding that installing even protective worms is not cool.

WHO KNOWS WHAT THEIR DEFINITION OF ‘WHITE HAT’ STUFF IS?

Dr. Herbert Lin, Stanford University

“There is an informal consensus that this is not an ethical thing to do,” Lin added. “You only have their word for it that they are going to do good stuff. Who knows what their definition of ‘white hat’ stuff is? And if you did, how do you know they are doing it?”

Reid, the KeyLogic expert, said the Hajime worm was “a little more robust” than Mirai.

“It’s written in some higher order language. It’s very powerful,” he said.

The Hajime worm is programmed to avoid networks of certain U.S. companies and government entities, Soumenkov said, noting that they include those of General Electric, Hewlett-Packard, the U.S. Postal Service and the Department of Defense.

Such worms are designed to infect any device or machine with a connection to the internet, harnessing them as “zombie” soldiers in a botnet army. Infected devices can include not only appliances in the home, like coffeemakers and baby monitors, but also vending machines, soap dispensers, jet engines, lightbulbs and industrial micro-controllers.

Already, up to 90 percent of the email traffic on the internet is spam, although internet service providers do a pretty good job of clearing it out with spam filters, Lin said, letting only a fraction through.

“Let’s say you increase that fraction by a factor of 10, or 100, which is what these IoT botnets threaten to do,” Lin said. “I assure you at that point you will get a lot more spam in your email inbox. Let’s say you get 100 times as much spam as you get now. It might make your email account unusable.”

SINGAPORE: Staff from digital and technology teams in several ministries will form a new office in charge of digital transformation in the public service on May 1, the Prime Minister’s Office announced on Monday (Mar 20).

The Smart Nation and Digital Government Office (SNDGO), to be formed under the Prime Minister’s Office, will comprise staff from the Ministry of Finance’s Digital Government Directorate, the Ministry of Communications and Information’s Government Technology Policy department and the Smart Nation Programme Office.

The Government Technology Agency (GovTech) will also be placed under the Prime Minister’s Office as the implementing agency of SNDGO.

Together, GovTech and SNDGO will form the Smart Nation and Digital Government Group (SNDGG).

The SNDGG’s responsibilities include driving digital transformation for the public service to strengthen the Government’s information and communications technology infrastructure and improve public service delivery.

The group will lead the development of a national digital identity framework to facilitate digital transactions as well as a national platform to support Government agencies’ use of Internet of Things applications, which link physical items such as cars, health devices and home appliances to the Internet.

It will work with other Government agencies, industries and the public to apply technologies to improve Singaporeans’ lives in areas such as urban mobility, the Prime Minister’s Office said. For example, the SNDGG will work with the Land Transport Authority on technologies to improve public transport, enhance urban logistics and reduce congestion.

It will also build on ongoing work by GovTech to enhance data sharing through the data.gov.sg portal and collaborate with the Monetary Authority of Singapore to promote e-payments.

NG CHEE KHERN TO BE PERMANENT SECRETARY OF SNDGG

Permanent Secretary of Defence Development in the Ministry of Defence Ng Chee Khern will concurrently lead the SNDGG as Permanent Secretary from May 1.

The SNDGG will be overseen by a ministerial committee chaired by Deputy Prime Minister Teo Chee Hean. Minister for Communications and Information Yaacob Ibrahim will be the deputy chairman. Other committee members include Minister-in-charge of the Smart Nation initiative Vivian Balakrishnan, Minister for Higher Education and Skills Ong Ye Kung – who has been appointed to champion public service innovation – and Minister of State for Communications and Information and Education Janil Puthucheary, who will be the Minister-in-charge of GovTech.

Mr Ng will also retain his appointment as chairman of the GovTech Board, which will oversee GovTech’s operations and guide the agency’s efforts to support Smart Nation and digital government, the Prime Minister’s Office said.

RE-ORGANISATION WILL “TURBO-CHARGE” GOVERNMENT’S EFFORTS

Dr Balakrishnan said the reorganisation will put the Smart Nation’s master planning, policy and implementation together and “turbo-charge” the Government’s efforts towards this goal.

“This is not really a technical or technological issue per se. It requires a change in mindset, a change in relationships, the way we work together as a whole of Singapore,” he said.

For example, it requires a whole-of-Government effort to put together a common platform for e-payments, along with the cooperation of the whole private sector as well as banking and financial institutions, Dr Balakrishnan said.

Dr Puthucheary also said efforts to improve the way the Government is run will not work as well as desired without “excellent people”.

“A big part of what we want to do is to build a deep engineering talent in Singapore, bringing more people into engineering, into ICT engineering, cyber security engineering, data analysis, whether they’re here in Singapore or Singaporeans residing overseas.”

He added that there are many talented Singaporeans working in these fields overseas. “We’re hoping we can attract people back into Singapore to build that engineering team here.”

The claim that GCHQ carried out surveillance on Donald Trump during the election campaign is “arrant nonsense”, Rick Ledgett, the number two at the US National Security Agency (NSA) has told the BBC in an exclusive interview.

A commentator on Fox News had claimed that GCHQ had carried out the activity on America’s behalf, but Mr Ledgett said the claim showed “a complete lack of understanding in how the relationship works”.

Each side, he said, was prohibited from asking the other partner to carry out acts that they were prohibited from doing.

He also said the huge risks to the UK in carrying out such an act would completely outweigh any benefits.

“Of course they wouldn’t do it. It would be epically stupid,” he told me.

GCHQ had also dismissed the allegation as nonsense.

Mr Ledgett’s comments came in a wide-ranging – and long-scheduled – interview in his office at NSA headquarters at Fort Meade. He acknowledged that these were unusual times when it came to the political maelstrom surrounding America’s intelligence agencies and their relationship with the new administration.

“Our job in the intelligence community is to be apolitical. Our job is to speak truth to power,” he emphasised.

The origins of much of the tension lie in the assessment by the US intelligence community that Russia interfered in the presidential election, and the subsequent reaction from Donald Trump.

Mr Ledgett said the evidence of Russian involvement was “extraordinarily strong” and “irrefutable” and that the NSA had played a key role in establishing the case.

Mr Ledgett said he was “dead solid 100% confident” that the Russian state was behind the attempts – although he said it was not for the intelligence community to evaluate the actual impact of those attempts on the vote itself.

President Vladimir Putin insists that Russia did not interfere in the US election. AP photo

There has been speculation that Russia will interfere in upcoming European elections, but the NSA deputy director said it was hard for him to talk about any evidence supporting that.

There has been a shift towards more aggressive action in cyberspace in recent years – from Russia but also other states – with some commentators claiming that “cyber war” is breaking out.

Low-intensity conflict rather than war is a better description, Mr Ledgett said.

“Cyber war is going to look very different – you are going to see massive failures of key infrastructure systems in the countries that are being targeted in a way we have not seen yet.”

The problems in attributing attacks and the lower barriers for entry mean that this trend may well continue, though.

The US last week indicted a group of Russian hackers as part of a broader strategy of trying to develop layered deterrence. Chinese and Iranian hackers have been indicted in the past.

“Our assessment is that it does cause actors to pause,” Mr Ledgett said, while acknowledging it did not provide absolute deterrence.

The spread of internet-connected devices in the home is another concern.

“It’s a truism that the more things you connect to a network, the more vulnerabilities you introduce,” Mr Ledgett argued, adding that he did not have what are called “Internet of Things” devices in his own home.

Last week there were claims that the CIA – along with Britain’s MI5 – had found vulnerabilities in some “smart” TV sets which allowed them to be turned into bugging devices.

It has been claimed that the CIA devised a spyware attack for Samsung TVs. Getty Images

Mr Ledgett emphasised that the mission of the NSA was to focus on foreign intelligence and not domestic.

He said that 90% of vulnerabilities in systems that the NSA spotted were reported to companies so they could fix them. And any vulnerabilities that the agency sought to leave in place to exploit for intelligence gathering needed to be approved by other government agencies.

“There’s a fringe narrative out there that the US and UK and all these other governments are willy-nilly just exploiting every vulnerability in every device they can in order to gather information into a big pile and then root through it for interesting things. That’s not what we do at all.”

He acknowledged that the debate around the NSA’s power was healthy, but said the way it came about was bad, referring to the Edward Snowden revelations.

He said that while he would not point to specific terrorist attacks or deaths as a result of disclosures, the NSA had seen one thousand “entities” (such as terrorist groups or foreign military units) which had tried to change behaviour to avoid surveillance.

Mr Ledgett spoke to the BBC at the NSA’s headquarters in Fort Meade. Reuters photo

Mr Ledgett is due to step down in the coming months after a 40-year career in national security. Twenty-nine of those years were spent at the NSA, where he ended up as its most senior civilian.

He acknowledged that the current environment – with the intelligence agencies drawn into political debate – was unprecedented.

“It is an uncomfortable place to be,” he said. “Intelligence needs to not be politicised to be at its best.”

TOKYO (AFP) – Japan’s SoftBank said Wednesday it will buy US asset manager Fortress Investment Group for $3.3 billion, as it moves to hire experienced money managers before launching a major technology investment fund.

The mobile giant said it was paying $8.08 a share for New York-based Fortress, a 39 percent premium on its February 13 close price.

Fortress is a global investment firm with 1,100 employees and $70.1 billion in assets under management as of September last year, according to a joint statement.

SoftBank said the firm’s top management would stay in place and it would continue to operate independently under its umbrella.

Son was among the first business people to meet Donald Trump after his November election victory.

SoftBank’s founder pledged to invest $50 billion in business and job-creation in the United States, winning praise from the then-president-elect.

Son later said the money would come from the $100 billion technology investment fund he is setting up with Saudi Arabia’s sovereign wealth fund and other partners, a move announced in mid-October.

The Japanese billionaire plans to use the SoftBank Vision Fund to invest heavily in the “Internet of Things,” artificial intelligence and robotics.

SoftBank, which is little known outside Japan, has gone on an acquisition spree over the years. It paid $22 billion for 80 percent of US mobile carrier Sprint in 2013 and more recently announced the $32-billion purchase of British iPhone chip designer ARM Holdings — raising concerns about its debt-heavy balance sheet.

SoftBank shares rose 1.58 percent to close at 8,670 yen in Tokyo on Wednesday.

SoftBank has said it will put up about $25 billion for the Vision Fund over the next five years, while the Saudi public investment fund’s contribution could reach $45 billion.

SoftBank is aiming to close the first round of investment in the Vision Fund by the end of this month, Bloomberg News reported, citing people familiar with the matter.

US tech giants Apple and Qualcomm, as well as Oracle chairman Larry Ellison will invest $1.0 billion each in the fund, Bloomberg said.

Here is a roadmap for President-elect Trump to mitigate threats and seize opportunity.

For nearly 70 years, the NATO treaty has stood the test of time. Elegant in its simplicity, this two-page treaty has established the principle, and defined the terms, of collective defense. An attack against one ally constitutes an attack against all 28 member nations.

As one might expect of a document written in 1949, there are references to armed attacks on territories, troops, ships and planes. Not surprisingly, the word “cyber” appears nowhere. To try to address this gap, NATO Secretary General Jens Stoltenberg in June stated that a cyber attack could, in fact, be interpreted as an “armed attack” under the treaty. Left unstated is how significant or disabling that cyber attack must be before Article 5 would be triggered.

This uncertainty captures the challenge of relying on systems and protocols constructed decades ago to confront dynamic new threats like cyber.

When it comes to national security, change too often comes in the wake of tragic events that defy accepted paradigms. The most recent was September 11th, which caught political and military leaders by surprise.

With senior defense officials raising alarms about the potential for a “Cyber 9/11” or a “Cyber Pearl Harbor,” however, there is an opportunity to take decisive action now on the issue that is among the most critical to America’s physical and economic security. As President-elect Donald Trump assembles his national security team, the new administration and the business community should collaborate to develop a sophisticated, forward-looking cyber policy that is founded on three core principles:

First, understand the scale of the risk.

When most people think about cyber security right now, what comes to mind is the theft of personal data through hacking e-mails or stealing passwords. For the average American, the risk feels more like a nuisance than a threat to our existence.

Respected military officials, however, have asserted that cyber potentially poses a more immediate threat to our collective security than even nuclear weapons.

We must move away from the mindset that the damage caused by cyber attacks will be limited to data and the digital world. Our physical assets, in particular the industrial systems that control our country’s critical infrastructure, are vulnerable as well.

A July study by the University of Cambridge’s Centre for Risk Studies estimated that an attack on the power grid in the northeast could cause up to $1 trillion in damages. And as we move closer to a world of smart cities, driverless cars and a connected everything, the potential for crippling physical attacks only increases. Moreover, unlike other countries, more than 80% of our nation’s critical infrastructure is owned and operated by the private sector. When put in this context, cyber should and must be a critical focus of America’s national security.

Second, think best practices, not new regulations.

In the U.S., we have scores of regulations relating to cyber security and data privacy. The Trump administration can make tangible progress in enhancing our collective cyber resilience without necessarily pressing for additional laws or regulations.

In the interactions my firm, Marsh & McLennan, have with thousands of businesses across the country, executives are no longer under any illusions about the potential severity of the cyber threat to their companies. Accordingly, the goal should be to make “best practices” into “common practices.” The U.S. should be thinking about innovative technologies, enhanced security protocols and incentives that encourage greater collaboration between the public and private sectors.

One example involves the Domain Name System (DNS), which is essentially the telephone book of the internet. When a user types in an internet address, that address needs to be translated into the language of the internet (IP numbers like 10.100.10.10). DNS performs that translation. Hackers, however, have devised methods to misdirect internet traffic intended for one site and divert it to another, malicious site.

Fortunately, there is a relatively simple fix called “DNS filtering” to combat this new vector of attack. By reviewing millions of feeds from public and private sources, data scientists can identify malicious sites that are being used by hackers to launch cyber attacks. “DNS filtering” is equivalent to blacking out those pages, or sites, from the internet phone book.

Particularly for small and medium sized enterprises, this solution can be implemented in a matter of hours by IT staff. Despite its effectiveness and simplicity, however, only a fraction of companies have implemented this solution. For this reason, the Global Cyber Alliance, a public-private partnership led by the New York District Attorney, the City of London Police Commissioner, and the Center for Internet Security, has made global deployment of DNS filtering one of its top priorities.

A second example involves the Internet of Things. The recent Mirai “botnet” attack was a wakeup call about the threat posed by the Internet of Things. Hackers manipulated hundreds of thousands of common consumer devices like security cameras and thermostats to launch an extremely sophisticated attack. The manufacturers of these products distributed these devices to the public with simple default passwords like “12345” or even “password.” As a result, hackers were able to scan the internet for any device with these passwords and then reprogram these devices – at the appointed moment – to flood a target in a massive Distributed Denial of Service attack. If this attack had been directed at critical infrastructure, rather than the service provider for websites like Twitter and Spotify, the consequences would likely have been far more severe.

Once again, there are tangible steps that can be taken to mitigate this new threat. The Internet Engineering Task Force, a community of network designers, operators and researchers, has developed a potential framework for manufacturers to configure their products in a manner that will preclude their being weaponized in this fashion.

To accelerate this effort, government and industry should collaborate to develop a set of best practices for IoT products that would enhance their security and provide consumers with greater confidence in the products they buy.

Third, see the opportunities, not just the challenges.

America has always been adept at following Winston Churchill’s sage comment: “The optimist sees opportunity in every danger; the pessimist sees danger in every opportunity.” World War II led to a manufacturing boom that lifted the country out of the Great Depression. The Soviet threat of the 1960s spurred us to win the space race. Cyber security affords a similar opportunity.

A recent study by CyberSecurity Ventures predicts that the global market for cyber security will grow from $75 billion in 2015 to $170 billion in 2020. All of this investment will lead to the creation of new companies, and therefore, new jobs – especially for our veterans, who often leave our armed forces with unique knowledge and perspective on the digital battle lines of tomorrow. Just as in times past, the United States can take the lead, not just making our country and the world safer, but creating new jobs and opportunity in the process.

Peter J. Beshar is executive vice president and general counsel of Marsh & McLennan Companies.

Chinese companies have seen a more than 900 per cent increase in cybersecurity incidents since 2014, following the country’s rapid adoption of connected devices and a dip in regional cybersecurity budgets, according to a survey by PricewaterhouseCoopers.

In 2014, only 241 security incidents were reported, compared to 2,577 so far this year, equal to a 969 per cent increase, according to PwC’s Global State of Information Security survey.

“The level of espionage or activity relating to cybersecurity incidents, such as data leakage or data theft is a lot higher [in China and Hong Kong] than any other countries,” said Kenneth Wong, PwC China and Hong Kong team leader for cybersecurity and privacy.

The rise in the number of incidents is due to the “huge rate of adoption” of Internet of Things (IoT) devices in the region, such as wearables, webcams and home automation systems, many of which are often not equipped with adequate cybersecurity measures and are easy to hack, said Marin Ivezic, partner for risk assurance, cybersecurity and privacy at PwC.

These devices can then be turned into “zombies” that launch cyberattacks on other devices and companies.

Despite the increase in incidents, total cybersecurity budgets for the Chinese companies surveyed in 2016 had dropped 7.6 per cent from the previous year to a combined US$7.3 million.

The dip in overall cybersecurity budget for Chinese companies could be a “reflection of the overall economy”, said Ivezic. China’s economy has slowed down due to growing debt and an overcapacity in its factories, while Hong Kong has also been negatively hit by the slowdown on the mainland.

The survey also found that companies view insiders to be the most likely source of cybersecurity incidents, accounting for 44 per cent of the incidents, especially as hackers become more sophisticated and tactics such as phishing attacks are increasingly targeted at companies.

Furthermore, the growing “bring your own device” (BYOD) trend also plays a part in the increasing number of cybersecurity incidents in China and Hong Kong, as millennials in the workforce today favour doing work on their own laptops or mobile phones in the office, Ivezic said.

On such private devices, companies are unable to implement the usual security measures deployed on company hardware, leaving sensitive or confidential material easily accessible on their device.

Over 440 executives from companies in China and Hong Kong were surveyed in the global survey spanning over 130 countries.

Ivezic called for IoT manufacturers to produce devices with better cybersecurity protection, instead of devices that have user names and passwords hard-coded into the device.

He also added that companies in China and Hong Kong need to educate their employees to better protect themselves against targeted malicious attacks, such as phishing emails, which compromise business email and could lead to account takeover attacks.

This article appeared in the South China Morning Post print edition as:

Japan’s SoftBank (9984.T) will buy Britain’s most valuable technology company ARM (ARM.L) for $32 billion in cash, an audacious attempt to lead the next wave of digital innovation with a chip designer that powers the global mobile phone industry.

Led by the charismatic Japanese investor, Masayoshi Son, SoftBank swooped on the Apple supplier ARM in the three weeks since Britain voted to leave the European Union, a result which stunned financial markets and has sent sterling down 11 percent against both the dollar and yen.

While the drop has made British assets much cheaper for foreign investors, the chief of the telecoms and internet group played down any suggestion that this was an opportunistic deal.

Son said he had been following ARM for the last 10 years and decided now was the right time to invest in a firm that provides the technology in nearly all smartphones including Apple’s (AAPL.O) iPhone and Samsung’s (005930.KS) Galaxy.

ARM is also poised to play a central role in the tech industry’s shift to the ‘internet of things’ (IoT) – a network of devices, vehicles and building sensors that collect and exchange data – a stated focus for SoftBank founder and CEO Son.

“ARM will be the center of the Internet of Things, in which everything will be connected,” he told reporters. “IoT is going to be the biggest paradigm shift in human history (and) we have always invested at the beginning of every paradigm shift.”

The ARM deal is one of Japan’s biggest overseas ventures and the latest in a parade of Japanese companies seeking growth abroad as the domestic economy stagnates.

From a British point of view, the capital investment is so big that it covers approaching three months of the country’s huge current account deficit, according to Kit Juckes, head of currency strategy at Societe Generale.

It is SoftBank’s largest takeover to date and marks a departure for a group whose tech and telecom portfolio ranges from U.S. carrier Sprint (S.N) to a stake in Chinese e-commerce giant Alibaba (BABA.N) and humanoid robot ‘Pepper’ – but does not yet include a major presence in the semiconductor industry.

The deal will also mark a major change for the 26-year-old British firm based in Cambridge, eastern England, and which touts its independence as a reason why it can work with the rival players in the mobile industry.

British politicians have objected in recent years to some international takeovers including Pfizer’s (PFE.N) failed bid to buy AstraZeneca (AZN.L) and the successful move by Kraft to buy British chocolatier Cadbury.

RELATED COVERAGE

But Son spoke to British Prime Minister Theresa May over the weekend and within minutes of SoftBank announcing the deal on Monday the government released a statement saying it showed Britain remained open for business.

Uncertainty surrounding the vote to leave the EU in last month’s referendum has raised fears that foreign investment, which is vital for covering the current account deficit, might fall.

ARM Chief Executive Simon Segars told Reuters the board had been impressed with SoftBank’s promise to increase jobs at ARM, its willingness to engage the British government, and the 43 percent premium the group was willing to pay.

ARM shares surged 42 percent to 16.90 pounds by 1408 GMT.

“SOFTBANK 2.0”

“SoftBank’s position as an entity outside the semiconductor industry allows ARM to retain its independence and protect existing customer relationships, while commitment to UK investment ensures management buy-in,” Jefferies analysts said in a note. “It’s difficult to see other suitors at this stage.”

The acquisition is the first for Son, 58, since he last month rescinded plans to retire – effectively pushing out his heir apparent, former Google (GOOG.O) executive Nikesh Arora.

Son, whose lucrative early investments include Alibaba, said then that he wanted to “cement SoftBank 2.0”, turn around loss-making Sprint (S.N) and “work on a few more crazy ideas”.

Though he has a low profile outside Asia, Son has long been an unconventional visionary in the often closed and clubby world of corporate Japan, turning profits from Japanese telecoms into bets on up-and-coming start-ups.

Not all have been a success: SoftBank’s $22 billion acquisition of a controlling stake in Sprint in 2013 has left the group with hefty debts. But Son said on Monday his decision to move for ARM reflected his confidence that Sprint was close to turning around.

RELATED COVERAGE

SoftBank had interest-bearing debt of 11.9 trillion yen ($112.6 billion) at end-March, including 4 trillion yen at Sprint, and its net debt currently stands at 3.8 times core earnings.

SoftBank has raised nearly 2 trillion yen in cash over the last few months through asset disposals, according to Son – including the sale of shares in China’s Alibaba, unusual for a group that has rarely exited investments.

But analysts had expected it to use the cash to reduce debt or give shareholders a windfall by buying back its own shares.

Instead, Son appears to have leapt on the opportunity to buy ARM at a time when Britain was convulsed by the political and financial fall-out from the vote to leave the EU, which prompted sterling’s fall to a 31-year low against the dollar.

Though ARM has warned on the staffing impact of Brexit, its revenues are largely in dollars, and the weaker pound prompted its shares to climb almost 17 percent since the vote.

Under the offer on Monday SoftBank said it was committed to keeping top managers, ARM’s headquarters and to at least double the employee headcount in Britain.

Analysts said on Monday that a counterbid was not impossible but also unlikely, as any rival bidder among ARM’s customers or Chinese rivals could face regulatory challenges.

SoftBank shares were not traded on Monday, a market holiday in Tokyo.

Lazard and Goldman Sachs were the lead financial advisers to ARM while the Raine Group, Robey Warshaw and Mizuho Securities acted as financial advisers to SoftBank.

(Additional reporting by Makiko Yamazaki in Tokyo and Paul Sandle, Costas Pitas, Anirban Nag, and Jemima Kelly in London; Writing by Clara Ferreira-Marques and Kate Holton; Editing by Guy Faulconbridge, Will Waterman and David Stamp)

By YURI KAGEYAMA AND PAN PYLAS AP BUSINESS WRITERS
The Associated Press

SoftBank founder and Chief Executive Officer Masayoshi Son. AP photo

Japanese technology company SoftBank Group Corp. is buying British ARM Holdings for 24.3 billion pounds ($31 billion), in a deal the British government hailed Monday as a vote of confidence in the country following last month’s vote to leave the European Union.

The recommended cash deal underlines SoftBank’s desire to expand in the so-called “Internet of Things,” which refers to how a multitude of home devices from smart-thermostats to security cameras and domestic appliances can connect online and work in sync.

ARM, which is the biggest-listed technology company in Britain, has a world-renowned reputation as an innovator in the “Internet of Things” — its technology is used in most smartphones, for example.

“ARM will be an excellent strategic fit within the SoftBank group as we invest to capture the very significant opportunities provided by the ‘Internet of Things’,” said Masayoshi Son, Chairman and CEO of SoftBank.

ARM centers its business on intellectual property, especially in mobile computing, rather than chip manufacturing, for which it relies on partners. Its technology is used in 95 percent of smartphones and 80 percent of digital cameras, according to the company. Augmented-reality headsets, biometric sensors, self-driving cars, commercial drones and smart watches all use ARM technology.

SoftBank said it intends “to at least double” the number of employees employed by ARM in the U.K. over the next five years. Cambridge-based ARM, which was founded in 1990, employs a little more than 4,000 people worldwide. Around 1,600 of those are employed in Britain.

Philip Hammond, Britain’s new Treasury chief, said the deal shows that Britain has “lost none of its allure to international investors” in the wake of the June 23 vote to leave the European Union.

“Britain is open for business — and open to foreign investment,” Hammond said.

The vote for so-called Brexit has raised fears that the British economy will suffer. A raft of evidence already shows consumer and business sentiment has taken a hit since the vote, prompting some economists to warn that the country is heading for recession.

“The transaction represents the first major acquisition following the referendum and whilst the purchase doesn’t constitute a resounding vote of confidence in the post-EU UK, it does illustrate that the after-effects of the Brexit have not deterred all parties from continuing with business as usual,” said David Cheetham, market analyst at XTB.

One major impact of the referendum result has been a big fall in the value of the British pound but SoftBank’s Son said his company wasn’t buying ARM on the cheap given that its share price had actually risen since the vote, offsetting any impact from the currency’s fall.

The deal, which SoftBank said it hopes to complete by the end of September, has a few steps pending. ARM shareholders, who have been advised by the board to accept the offer, and the English courts still need to give their backing.

“The board believes that by accessing all the resources that SoftBank has to offer, ARM will be able to further accelerate the use of ARM-based technology wherever computing happens,” ARM Chairman Stuart Chambers said.

SoftBank, a mobile carrier in Japan, also runs a solar-based utility and a humanoid robot business. It has struggled trying to turn around its U.S. mobile company Sprint Corp., although Son says there is progress on that.

The ARM purchase is the first major announcement from SoftBank after Nikesh Arora, who had joined from Google in 2014, said he was stepping down as Softbank president. Son has always been the chief engineer of SoftBank, and was behind Arora’s appointment, but he has repeatedly said he is trying to groom the next head of the company.